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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`________________________________________________
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`SECURITIES AND EXCHANGE COMMISSION, :
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`Plaintiff,
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`v.
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`: Civil Action No. 23-cv-00022
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`COOPER J. MORGENTHAU,
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`Defendant.
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`________________________________________________:
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`[PROPOSED] JUDGMENT AS TO DEFENDANT COOPER J. MORGENTHAU
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`The Securities and Exchange Commission having filed a Complaint and Defendant
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`Cooper J. Morgenthau having entered a general appearance; consented to the Court’s jurisdiction
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`over Defendant and the subject matter of this action; consented to entry of this Judgment; waived
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`findings of fact and conclusions of law; and waived any right to appeal from this Judgment:
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`I.
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`IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
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`permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the
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`Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
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`promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of
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`interstate commerce, or of the mails, or of any facility of any national securities exchange, in
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`connection with the purchase or sale of any security:
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`(i)
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`to employ any device, scheme, or artifice to defraud;
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`1
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 2 of 14
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`(ii)
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`to make any untrue statement of a material fact or to omit to state a material fact
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`necessary in order to make the statements made, in the light of the circumstances
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`under which they were made, not misleading; or
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`(iii)
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`to engage in any act, practice, or course of business which operates or would
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`operate as a fraud or deceit upon any person.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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`Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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`receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers,
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`agents, servants, employees, and attorneys; and (b) other persons in active concert or
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`participation with Defendant or with anyone described in (a).
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`II.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is
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`permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933
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`(the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any
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`means or instruments of transportation or communication in interstate commerce or by use of the
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`mails, directly or indirectly:
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`(i)
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`(ii)
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`to employ any device, scheme, or artifice to defraud;
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`to obtain money or property by means of any untrue statement of a material fact
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`or any omission of a material fact necessary in order to make the statements
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`made, in light of the circumstances under which they were made, not misleading;
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`or
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`(iii)
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`to engage in any transaction, practice, or course of business which operates or
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`would operate as a fraud or deceit upon the purchaser.
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`2
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 3 of 14
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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`Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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`receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers,
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`agents, servants, employees, and attorneys; and (b) other persons in active concert or
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`participation with Defendant or with anyone described in (a).
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`III.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is
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`permanently restrained and enjoined from violating Section 13(b)(5) of the Exchange Act [15
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`U.S.C. § 78m(b)(5)] and Rule 13b2-1 [17 CFR § 240.13b2-1] by knowingly circumventing or
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`knowingly failing to implement a system of internal accounting controls or by directly or
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`indirectly falsifying or causing to be falsified any books, records, or accounts subject to Section
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`13(b)(2) of the Exchange Act [15 U.S.C. § 78m(b)(2)].
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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`Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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`receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers,
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`agents, servants, employees, and attorneys; and (b) other persons in active concert or
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`participation with Defendant or with anyone described in (a).
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`IV.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is
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`permanently restrained and enjoined from violating Exchange Act Rule 13b2-2(a) and (b) [17
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`C.F.R. § 240.13b2-2(a) and (b)] by, while acting as an officer or director of an issuer:
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`A) directly or indirectly making or causing to be made a materially false or misleading
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`statement, or omitting to state or causing another person to omit to state any material
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`3
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 4 of 14
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`fact necessary in order to make statements made, in light of the circumstances under
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`which such statements were made, not misleading, to an accountant in connection
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`with (i) any required audit, review or examination of the financial statements of an
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`issuer, or (ii) the preparation or filing of any document or report required to be filed
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`with the Commission; or
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`B) directly or indirectly taking any action to coerce, manipulate, mislead, or
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`fraudulently influence an independent public or certified public accountant engaged
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`in the performance of an audit or review of the financial statements of an issuer that
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`are required to be filed with the Commission, if Defendant knows or should know
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`that such action, if successful, could result in rendering the issuer’s financial
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`statements materially misleading.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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`Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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`receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers,
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`agents, servants, employees, and attorneys; and (b) other persons in active concert or
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`participation with Defendant or with anyone described in (a).
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`V.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is
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`permanently restrained and enjoined from violating Exchange Act Rule 13a-14 [17 C.F.R.
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`§ 240.13a-14] by filing or causing to be filed any annual or quarterly report on behalf of any
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`issuer required to be filed with the Commission pursuant to Section 13(a) of the Exchange Act
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`and the rules and regulations promulgated thereunder, which contains a certification required by
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`Rule 13a-14 [17 C.F.R. § 240.13a-14] that includes an untrue statement of material fact; or fails
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 5 of 14
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`to include, in addition to the information required to be stated in such certification, such further
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`material information as may be necessary to make the required statements, in light of the
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`circumstances under which they were made, not misleading; or fails to disclose any information
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`required to be disclosed therein.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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`Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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`receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers,
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`agents, servants, employees, and attorneys; and (b) other persons in active concert or
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`participation with Defendant or with anyone described in (a).
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`VI.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section
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`21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and/or Section 20(e) of the Securities Act
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`[15 U.S.C. § 77t(e)], Defendant is prohibited from acting as an officer or director of any issuer
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`that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C.
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`§ 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C.
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`§ 78o(d)].
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`VII.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, upon motion of the
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`Commission, the Court shall determine whether it is appropriate to order disgorgement of ill-
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`gotten gains and/or a civil penalty pursuant to Section 20(d) of the Securities Act [15 U.S.C.
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`§ 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and, if so, the
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`amount(s) of the disgorgement and/or civil penalty. If disgorgement is ordered, Defendant shall
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`pay prejudgment interest thereon, calculated from July 1, 2021, based on the rate of interest used
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`5
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 6 of 14
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`by the Internal Revenue Service for the underpayment of federal income tax as set forth in 26
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`U.S.C. § 6621(a)(2). In connection with the Commission’s motion for disgorgement and/or civil
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`penalties, and at any hearing held on such a motion: (a) Defendant will be precluded from
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`arguing that he did not violate the federal securities laws as alleged in the Complaint; (b)
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`Defendant may not challenge the validity of the Consent or this Judgment; (c) solely for the
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`purposes of such motion, the allegations of the Complaint shall be accepted as and deemed true
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`by the Court; and (d) the Court may determine the issues raised in the motion on the basis of
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`affidavits, declarations, excerpts of sworn deposition or investigative testimony, and
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`documentary evidence, without regard to the standards for summary judgment contained in Rule
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`56(c) of the Federal Rules of Civil Procedure. In connection with the Commission’s motion for
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`disgorgement and/or civil penalties, the parties may take discovery, including discovery from
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`appropriate non-parties.
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`VIII.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of
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`exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the
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`allegations in the complaint are true and admitted by Defendant, and further, any debt for
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`disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this
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`Judgment or any other judgment, order, consent order, decree or settlement agreement entered in
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`connection with this proceeding, is a debt for the violation by Defendant of the federal securities
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`laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the
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`Bankruptcy Code, 11 U.S.C. §523(a)(19).
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 7 of 14
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`IX.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
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`jurisdiction of this matter for the purposes of enforcing the terms of this Judgment.
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`Dated: ____________________, 2023
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`____________________________________
`UNITED STATES DISTRICT JUDGE
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 8 of 14
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SECURITIES AND EXCHANGE COMMISSION,
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`Plaintiff,
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`v.
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`No. 23 Civ. ___________
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`COOPER J. MORGENTHAU,
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`Defendant.
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`CONSENT OF DEFENDANT COOPER J. MORGENTHAU
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`1.
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`Defendant Cooper J. Morgenthau (“Defendant”) waives service of a summons
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`and the complaint in this action, enters a general appearance, and admits the Court’s jurisdiction
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`over Defendant and over the subject matter of this action.
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`2.
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`Defendant has entered into a written agreement to plead guilty to criminal conduct
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`relating to certain matters alleged in the complaint in this action. Specifically, in United States v.
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`Cooper J. Morgenthau, Crim. No. [TBD] (S.D.N.Y. 2023), Defendant agreed to plead guilty to a
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`violation of Title 18, United States Code, Section 1343. This Consent shall remain in full force
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`and effect regardless of the existence or outcome of any further proceedings in United States v.
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`Cooper J. Morgenthau.
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`3.
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`Defendant hereby consents to the entry of the Judgment in the form attached
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`hereto (the “Judgment”) and incorporated by reference herein, which, among other things:
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`a. Permanently retrains and enjoins Defendant from violations of Section 17(a)
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`of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)],
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`Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934
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`1
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 9 of 14
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`(“Exchange Act”) [15 U.S.C. §§ 78j(b), 78m(b)(5)] and Rules 10b-5, 13b2-1,
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`13b2-2(a) and (b), and 13a-14 thereunder [17 C.F.R. §§ 240.10b-5, 240.13b2-
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`1, 240.13b2-2(a) and (b), 240.13a-14]; and
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`b. bars Defendant from acting as an officer or director of any issuer that has a
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`class of securities registered pursuant to Section 12 of the Exchange Act [15
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`U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the
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`Exchange Act [15 U.S.C. § 78o(d)].
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`4.
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`Defendant agrees that, upon motion of the Commission, the Court shall determine
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`whether it is appropriate to order disgorgement of ill-gotten gains and/or a civil penalty pursuant
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`to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange
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`Act [15 U.S.C. § 78u(d)(3)] and, if so, the amount(s) of the disgorgement and/or civil penalty.
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`The Defendant further understands that, if disgorgement is ordered, Defendant shall pay
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`prejudgment interest thereon, calculated from July 1, 2021, based on the rate of interest used by
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`the Internal Revenue Service for the underpayment of federal income tax as set forth in 26
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`U.S.C. § 6621(a)(2). Defendant further agrees that in connection with the Commission’s motion
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`for disgorgement and/or civil penalties, and at any hearing held on such a motion: (a) Defendant
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`will be precluded from arguing that he did not violate the federal securities laws as alleged in the
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`Complaint; (b) Defendant may not challenge the validity of this Consent or the Judgment;
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`(c) solely for the purposes of such motion, the allegations of the Complaint shall be accepted as
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`and deemed true by the Court; and (d) the Court may determine the issues raised in the motion
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`on the basis of affidavits, declarations, excerpts of sworn deposition or investigative testimony,
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`and documentary evidence, without regard to the standards for summary judgment contained in
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`Rule 56(c) of the Federal Rules of Civil Procedure. In connection with the Commission’s
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`2
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 10 of 14
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`motion for disgorgement and/or civil penalties, the parties may take discovery, including
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`discovery from appropriate non-parties.
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`5.
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`Defendant waives the entry of findings of fact and conclusions of law pursuant to
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`Rule 52 of the Federal Rules of Civil Procedure.
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`6.
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`Defendant waives the right, if any, to a jury trial and to appeal from the entry of
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`the Judgment.
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`7.
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`Defendant enters into this Consent voluntarily and represents that no threats,
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`offers, promises, or inducements of any kind have been made by the Commission or any
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`member, officer, employee, agent, or representative of the Commission to induce Defendant to
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`enter into this Consent.
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`8.
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`Defendant agrees that this Consent shall be incorporated into the Judgment with
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`the same force and effect as if fully set forth therein.
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`9.
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`Defendant will not oppose the enforcement of the Judgment on the ground, if any
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`exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and hereby
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`waives any objection based thereon.
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`10.
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`Defendant waives service of the Judgment and agrees that entry of the Judgment
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`by the Court and filing with the Clerk of the Court will constitute notice to Defendant of its terms
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`and conditions. Defendant further agrees to provide counsel for the Commission, within thirty
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`days after the Judgment is filed with the Clerk of the Court, with an affidavit or declaration
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`stating that Defendant has received and read a copy of the Judgment.
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`11.
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`Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the claims asserted
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`against Defendant in this civil proceeding. Defendant acknowledges that no promise or
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`representation has been made by the Commission or any member, officer, employee, agent, or
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`3
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 11 of 14
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`representative of the Commission with regard to any criminal liability that may have arisen or
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`may arise from the facts underlying this action or immunity from any such criminal liability.
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`Defendant waives any claim of Double Jeopardy based upon the settlement of this proceeding,
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`including the imposition of any remedy or civil penalty herein. Defendant further acknowledges
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`that the Court’s entry of a permanent injunction may have collateral consequences under federal
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`or state law and the rules and regulations of self-regulatory organizations, licensing boards, and
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`other regulatory organizations. Such collateral consequences include, but are not limited to, a
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`statutory disqualification with respect to membership or participation in, or association with a
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`member of, a self-regulatory organization. This statutory disqualification has consequences that
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`are separate from any sanction imposed in an administrative proceeding. In addition, in any
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`disciplinary proceeding before the Commission based on the entry of the injunction in this
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`action, Defendant understands that he shall not be permitted to contest the factual allegations of
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`the complaint in this action.
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`12.
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`Defendant understands and agrees to comply with the terms of 17 C.F.R.
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`§ 202.5(e), which provides in part that it is the Commission’s policy “not to permit a defendant
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`or respondent to consent to a judgment or order that imposes a sanction while denying the
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`allegations in the complaint or order for proceedings.” As part of Defendant’s agreement to
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`comply with the terms of Section 202.5(e), Defendant acknowledges the plea agreement for
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`related conduct described in paragraph 2 above, and: (i) will not take any action or make or
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`permit to be made any public statement denying, directly or indirectly, any allegation in the
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`complaint or creating the impression that the complaint is without factual basis; (ii) will not
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`make or permit to be made any public statement to the effect that Defendant does not admit the
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`allegations of the complaint, or that this Consent contains no admission of the allegations;
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`4
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 12 of 14
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`(iii) upon the filing of this Consent, Defendant hereby withdraws any papers filed in this action
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`to the extent that they deny any allegation in the complaint; and (iv) stipulates for purposes of
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`exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, that the
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`allegations in the complaint are true, and further, that any debt for disgorgement, prejudgment
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`interest, civil penalty or other amounts due by Defendant under the Judgment or any other
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`judgment, order, consent order, decree or settlement agreement entered in connection with this
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`proceeding, is a debt for the violation by Defendant of the federal securities laws or any
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`regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy
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`Code, 11 U.S.C. §523(a)(19). If Defendant breaches this agreement, the Commission may
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`petition the Court to vacate the Judgment and restore this action to its active docket. Nothing in
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`this paragraph affects Defendant’s: (i) testimonial obligations; or (ii) right to take legal or
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`factual positions in litigation or other legal proceedings in which the Commission is not a party.
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`13.
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`Defendant hereby waives any rights under the Equal Access to Justice Act, the
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`Small Business Regulatory Enforcement Fairness Act of 1996, or any other provision of law to
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`seek from the United States, or any agency, or any official of the United States acting in his or
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`her official capacity, directly or indirectly, reimbursement of attorney’s fees or other fees,
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`expenses, or costs expended by Defendant to defend against this action. For these purposes,
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`Defendant agrees that Defendant is not the prevailing party in this action since the parties have
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`reached a good faith settlement.
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`14.
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`In connection with this action and any related judicial or administrative
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`proceeding or investigation commenced by the Commission or to which the Commission is a
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`party, Defendant: (i) agrees to appear and be interviewed by Commission staff at such times and
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`places as the staff requests upon reasonable notice; (ii) will accept service by mail or facsimile
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`5
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 13 of 14
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`transmission of notices or subpoenas issued by the Commission for documents or testimony at
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`depositions, hearings, or trials, or in connection with any related investigation by Commission
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`staff; (iii) appoints Defendant’s undersigned attorney as agent to receive service of such notices
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`and subpoenas; (iv) with respect to such notices and subpoenas, waives the territorial limits on
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`service contained in Rule 45 of the Federal Rules of Civil Procedure and any applicable local
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`rules, provided that the party requesting the testimony reimburses Defendant's travel, lodging, and
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`subsistence expenses at the then-prevailing U.S. Government per diem rates; and (v) consents to
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`personal jurisdiction over Defendant in any United States District Court for purposes of
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`enforcing any such subpoena.
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`22.
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`Defendant agrees that the Commission may present the Judgment to the Court for
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`signature and entry without further notice.
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`6
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`Case 1:23-cv-00022-NRB Document 3 Filed 01/03/23 Page 14 of 14
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`/s/ Michael Paul Bowen
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